Where quality is the key
A great idea was born way back in 1986 but it took ten years of perseverance to make that idea a reality. Today, Rohan Pallewatte is at the helm of a Rs. 800 million project manufacturing impact detecting sensor harnesses for automobile airbags and seat belts for export. Lanka Harness (Pvt) Ltd., a BOI company of which he is the Managing Director cum Chief Executive Officer, has brought in over US $ 25 million of foreign exchange to the country.
The company won the Junior Chamber International ‘Most Enterprising Entrepreneur Award’ for 2006.
An attorney-at-law by profession, versatile Rohan Pallewatte holds a B.A.(English Special), has just completed a MBA at Sri Jayawardenapura University and has been a visiting lecturer and examiner in Business Law from 2000. While in Japan, he won a black belt for Judo from the Olympic Committee for Judo in Japan. Fluent in Japanese, he also won 1st place at a Japanese speech contest for foreigners living in Japan.
This project has opened the door to a whole new industry. “It is the first time Sri Lanka has been able to enter the international market with a 1 PPM product,” Rohan said. This means that when a million components are manufactured, only one reject would be tolerated.
Looking back, he said the idea first came to him when he was in Japan as a student from St. Anthony’s College, Kandy, on an American Field Service Scholarship from 1985 – 1986 and visited the Toyota Company in Aichi-Ken.
While going round the Toyota factory in a battery operated side car, he observed that there were hardly any people working. Inquiring whether it was a holiday, he was told that everything was automated. But, in one small enclosure, he observed that about 100 people were hard at work manufacturing automobile safety sensors. This process cannot be automated his guide told him. He also learnt that an employee at Toyota earns a minimum salary of JPYen 300,000.
“This is when I first got the idea,” Rohan recalled, “a process that cannot be automated, a labour intensive product and the availability of labour in Sri Lanka.” He was convinced it would be a feasible venture. “Don’t even dream of trying this in your own country,” said the officer at Toyota. “We may outsource anything but not automobile safety devices because they are the heart of the automobile.” However, determined not to be put off by the negative response, Rohan requested some samples of the product, which he was given.
Back in Sri Lanka, Rohan managed to source material from Singapore and manually turned out some samples, which he dispatched to Toyota. He had no response. Undeterred, he continued to send samples once in four months from1987 up to 1994. He did not receive even an acknowledgement. However, he never gave up on his dream.
In late 1994, Rohan contacted the official who had first conducted him round the factory. He was now a middle level manager. Once again he stressed to Rohan that his efforts were in vain. Yet, he gave him a valuable tip. “If you want your samples to be at least considered, send them to a few Japanese suppliers who are sending them to Toyota.”
Acting on this advice, Rohan soon had the names of ten suppliers of safety devices to Toyota. He dispatched ten samples to each of them. Once again he had a long wait with no response. Finally during the latter part of 1995, he had a response from a Japanese company, ITO Spring, which sent a reject report on eight of the ten samples. Rohan was happy to have finally got some response. Having carefully studied the reject report, he made the necessary adjustments and sent ten more samples. This time round, the rejects were two out of ten.
After another six months of silence, ITO Spring Co. of Japan placed an initial order of 100 pieces. The material was couriered by them from Japan. Rohan manufactured these 100 pieces manually. This was followed by an order for 1000 pieces. Rohan then realized that he could not turn out these numbers manually. As he did not have the means to start his own production facility, he contacted several local companies, seeking to outsource the product.
Fortunately, Siri Samarakkody, Managing Director of Esjay Electromag, an award winning local company responded favourably. “He did not charge anything but offered to discuss profit sharing modalities once the project got off the ground. By 1999, Esjay Electromag was manufacturing 300,000 pieces a month, which was the largest source of exchange for the company. Rohan became a consultant to the company.
He realized however, that if the Japanese were to stop sending material to Sri Lanka, the business would come to a halt. He was keen on putting it on a firmer footing. All the items manufactured were inspected for quality in Japan. Rohan suggested to the Japanese that they could cut costs drastically if they established an inspection facility in Sri Lanka. Harness came into being with an investment of US$ 800 million. The entire investment was from Japan and no money was borrowed from any bank or lending institute. After over ten years of perseverance and dedication to his goal, and 47 visits to Japan, during this period, Rohan Pallewatte finally realized his dream of bringing this new industry to Sri Lanka.
To achieve the 1PPM quality standard was highly challenging, Rohan said. He explained that he applied several methods, including a novel process employed in Japan, called Acculturation, to change the work ethic of the Sri Lankan workers and their perception of quality. “I have sent about 100 people to Japan for training and they have all come back,” he said proudly. “No bonds were signed. It was a matter of trust.”
In the spotlessly clean and hygienic complex of Lanka Harness, in the Biyagama EPZ, 130 workers in uniform jackets and caps encasing their hair, were bent over the work tables assembling components of the impact detection sensors, swiftly and carefully. In an adjoining smaller hall, equipped with sophisticated machinery, a new product-sunvisor arms is being put together. Another 102 workers are employed at Esjay Electromag at Homagama. “We have a flat structure with no supervisors but only some leaders. Below the MD and the Japanese factory manager, there is no middle management,” Rohan explained. Today he exports the impact sensors to Toyota, Honda, Mitsubishi, Mazda, Suzuki and Subaru of Japan, General Motors and Chrysler of USA and Volvo and Saab of Europe.
Looking back on his achievements, Rohan says, “We’ve got to understand that we are a small country; we cannot compete with countries like India or China on quantity. We have to concentrate more on quality and differentiation than on mass production.”